Read the headlines the last few months? You may have noticed an increasing trend in fraud on the part of Medicaid providers. Fraud ranging from charging for services never provided to misreporting on income tax returns. While many medicaid providers commit wholesale fraud of large proportions stealing funds from the medicaid program, many states continue to enact and prosecute draconian provisions against middle class families to make sure they turn over everything to pay nursing home bills. Who costs the taxpayers more: a family that gifted less than $100,000 or a pattern of corrupt medicaid providers?
The General Accounting Office of Congress recently completed a study revealing additional medicaid fraud by providers. Over 30,000 Medicaid providers, about 5 percent of those paid in fiscal year 2006, had over $1 billion of unpaid federal taxes. These 30,000 providers were identified from a nonrepresentative selection of providers from seven states: California, Colorado, Florida, Maryland, New York, Pennsylvania, and Texas. This $1 billion estimate is likely understated because some Medicaid providers have understated their income or not filed their tax returns.
They selected 25 Medicaid providers with high federal tax debt as case studies for more in-depth investigation of the extent and nature of abuse and criminal activity. For all 25 cases we found abusive and related criminal activity, including failure to remit individual income taxes or payroll taxes to IRS. Rather than fulfill their role as ‘‘trustees’’ of federal payroll tax funds and forward them to IRS, these providers diverted the money for other purposes. Willful failure to remit payroll taxes is a felony under U.S. law. Individuals associated with some of these providers diverted the payroll tax money for their own benefit or to help fund their businesses. Many of these individuals accumulated substantial assets, including million-dollar houses and luxury vehicles, while failing to pay their federal taxes. In addition, some case studies involved businesses that were sanctioned for substandard care of their patients. Despite their abusive and criminal activity, these 25 providers received Medicaid payments ranging from about $100,000 to about $39 million in fiscal year 2006.
Read the full report at http://www.gao.gov/new.items/d0817.pdf